Daily Market Report | Feb. 16, 2021
Stocks Rise on Stimulus Prospects – Wall Street Journal, 2/16/2021
- U.S. stocks rose Tuesday, putting major indexes on pace for another round of records as investors focus on the potential for more fiscal stimulus and the rollout of coronavirus vaccines.
- Investors in recent days have been heartened by expectations that a fresh round of stimulus spending and continued support from the Federal Reserve will support economic recovery.
- House Democrats are preparing to stitch together a legislative version of President Biden’s $1.9 trillion coronavirus relief proposal this week.
- Sentiment also has been buoyed by the rollout of vaccines and a drop in Covid-19 infection rates in many countries.
- A better-than-expected corporate earnings season also has underpinned the market rally.
- With about three-quarters of S&P 500 companies having reported, roughly 80% have beaten profit estimates, according to FactSet.
- Among individual stocks, shares of Palantir Technologies fell 9.5% after the data-integration and software company reported a surprise loss in the fourth quarter.
- Frigid temperatures across swaths of the U.S. have injected new momentum into the rally in energy markets.
- Natural-gas futures rose 7.5%.
- In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 1.264%, from 1.199% Friday.
- Yields rise when prices fall.
- Newly reported Covid-19 cases in the U.S. fell to their lowest level in nearly four months over Presidents Day weekend, and daily reported deaths declined sharply from a recent spike.
- There were more than 52,000 new cases reported for Monday, according to data compiled by Johns Hopkins University, down from 64,938 a day earlier and 89,727 a week earlier.
- Monday’s figure was the lowest since Oct. 18, 2020, and represents a drastic reduction from all-time highs of about 300,000 a day recorded in early January.
- Deaths, a lagging indicator that also tends to be lower toward the beginning of the week, were at 985 for Monday, the lowest number since Nov. 29, according to Johns Hopkins data.
- There were 65,455 people hospitalized in the U.S. on Monday, according to the Covid Tracking Project, the latest in more than a month of daily decreases.
- Europe was bracing for a rise in Covid-19 cases resulting from the spread of new, more contagious variants of the coronavirus even as the number of new infections continued to decline or plateau in parts of the continent.
- In France, authorities are monitoring clusters of the South African and Brazilian variants of the virus that have emerged in the French towns of Moselle and Dunkirk. France reported 4,376 new cases on Monday evening, up slightly week-on-week, but the country’s seven-day average of new cases was down 12% from the peak of 20,694 it reached on Feb. 2.
- Germany’s infection and death rates continue to decline. The Robert Koch Institute, the country’s center for disease control, recorded 3,856 new cases and 528 deaths in the last 24 hours.
CVS Health Signals Re-entry into ACA Marketplaces – Wall Street Journal, 2/16/2021
- CVS Health said it would re-enter the Affordable Care Act insurance marketplaces next year, as its major role in Covid-19 testing and vaccination allows it to forge ties to a growing number of consumers.
- Total revenue rose 4% to $69.55 billion, above the FactSet consensus of $68.73 billion.
- All of CVS’s business segments beat expectations, with pharmacy services revenue falling 1.9% to $36.36 billion amid continued price compression; retail/long-term-care revenue rising 6.6% to $24.06 billion; and healthcare benefits revenue climbing 11.4% to $19.10 billion.
- In the fourth quarter of 2020, net income fell to $973 million, or 74 cents a share, from $1.75 billion, or $1.34 a share, in the year-ago period.
- Excluding nonrecurring items, adjusted earnings per share declined to $1.30 from $1.73, but beat the FactSet consensus of $1.24.
- For 2021, CVS expects earnings per share of $6.06 to $6.22. It predicted adjusted earnings per share of $7.39 to $7.55, compared with the FactSet consensus of $7.54.
Big data firm Palantir signals slower annual revenue growth, shares fall – Reuters, 2/16/2021
- Tech billionaire Peter Thiel-backed data analytics firm Palantir Technologies on Tuesday signaled revenue growth would slow this year, casting a shadow on its better-than-expected quarterly results and sending its shares down 9%.
- Its revenue jumped to $322.1 million, above market expectations of $300.7 million.
- Revenue from government contracts jumped 85% to $190 million, while that in the commercial segment grew 4%.
- It signed 21 contracts each worth $5 million or more during the fourth quarter and said it expects sales in the first quarter to grow by about 45% from a year earlier.
- Palantir’s net loss narrowed to $148.3 million in the quarter ended Dec. 31 from $159.3 million, a year earlier.
- The company forecast a revenue growth of 30% in 2021, slower than the 47% rise in 2020 when it added large government contracts, including those from the U.S. Army and Air Force.
Southwest forecasts slower cash burn as February ticket sales improve – Reuters, 2/16/2021
- Southwest Airlines on Tuesday forecast slower cash burn in the current quarter as leisure bookings and demand improve in February.
- The U.S. budget carrier said it expects average core cash burn to be about $15 million a day in the first quarter, compared with the $17 million it estimated previously, sending its shares up more than 2% in trading before the bell.
- Southwest, however, said business travel demand and bookings remained depressed.
- Southwest also confirmed on Tuesday plans to fly Boeing’s 737 MAX, which was approved to fly commercially again in November after a 20-month safety ban, from March 11.
- Southwest late last month reported an annual loss of $3.1 billion, its first such loss since 1972, and said it was facing stalled demand in January and February, driven by high levels of COVID-19 cases and hospitalizations.
General Mills puts faith in cereals, ice cream and Mexican food for growth – Reuters, 2/16/2021
- General Mills will focus on eight key markets and five global product categories, including ice cream, cereal and Mexican meals, as the Betty Crocker cake mixes maker seeks to reach its long-term goal of up to 3% growth.
- The new “Accelerate” strategy will also see higher investments behind top-selling local brands such as Pillsbury, Totino’s, Yoki and Kitano, and bolt-on acquisitions and divestitures that represent 5% of net sales.
- General Mills will prioritize investments in eight core markets, including the United States, Brazil and India, and allocate “outsized resources and investments” on the five global product platforms that generate 45% of overall sales, Chief Executive Officer Jeff Harmening said at the Consumer Analyst Group of New York conference on Tuesday.
- The new plans are part of efforts to reach a long-term organic sales growth target of 2% to 3% and mid- to high-single-digit adjusted earnings per share growth in constant currencies.
- The Yoplait yogurt maker will also accelerate its media spending from mid-single-digit to high-single digits in fiscal 2021, while re-affirming its targets for the second half of the year.
Bitcoin Trades Above $50,000 for First Time – Wall Street Journal, 2/16/2021
- Bitcoin topped $50,000 for the first time Tuesday, doubling in value in less than two months.
- The digital currency traded as high as $50,203.53, up 4.2% for the day and more than 73% for the year.
- The total market value of bitcoin in circulation rose to $940 billion.
Lumber Prices Notch Records on Building, Remodeling Boom – Wall Street Journal, 2/16/2021
- Lumber prices have shot to fresh records, defying the normal winter slowdown in wood-product sales in a sign that the pandemic building boom is bowling into 2021.
- Lumber futures have climbed 47% over the past three weeks, to within a few dollars of records set in September. Lumber for March delivery ended trading Friday at $982.10 per thousand board feet, more than twice the price a year earlier.
UK watchdog voices concern over $9.2 billion eBay-Adevinta deal – Reuters, 2/16/2021
- Britain’s competition watchdog on Tuesday raised concerns over Adevinta’s planned acquisition of U.S. e-commerce group eBay’s classified ads business, sending the Norwegian company’s shares down 4.3%.
- The $9.2 billion deal announced in July would create the world’s largest classifieds group, but Adevinta and eBay must first resolve the Competition and Markets Authority’s concerns (CMA) to proceed with the takeover.
- “The CMA is concerned the merger could lead to a loss of competition between Shpock, Gumtree and eBay’s marketplace, with only Facebook Marketplace remaining as a significant competitor,” the CMA said in a statement.
- U.S. group eBay owns UK online auction sites Gumtree and ebay.co.uk while Adevinta owns Shpock.
Biden Administration Extends Covid-19 Mortgage Relief – Wall Street Journal, 2/16/2021
- The Biden administration extended a federal moratorium on home foreclosures for another three months and expanded assistance for people behind on their mortgage payments during the coronavirus pandemic.
- The White House said Tuesday that it would extend a ban on home foreclosures for federally backed mortgages through June 30. President Biden had earlier extended the moratorium, which had been set to expire at the end of January, until the end of March in a series of executive actions on his first day in office.
- The Biden administration also said it would give homeowners more time—through June 30—to enroll in a program to request a pause or a reduction in mortgage payments.
- Homeowners will now be able to receive up to six months of additional mortgage payment forbearance, in increments of three months, for those borrowers who entered forbearance before June 30, the White House said.
- Democrats chose not to include an increase in the federal debt ceiling in President Biden’s $1.9 trillion coronavirus relief package, leaving the often-contentious issue to be addressed later this year.
- The decision means Democrats will either have to include a debt-limit increase in a second tax-and-spending package that is likely to pass along party lines or negotiate with Republicans to have it added to another bill.
- If Congress doesn’t act by late summer or early fall, the U.S. will run out of legal borrowing capacity, according to an estimate from the Bipartisan Policy Center. Such a full breach, which has never occurred, could have significant but unpredictable effects on financial markets.
- Millions of Texans were left without electricity Monday as a rare winter storm boosted demand and crimped supplies, demonstrating that California isn’t the only state with a power grid vulnerable to extreme weather conditions.
- Ercot estimated that about 2 million homes were without power on Monday and cautioned that the outages would likely continue through Tuesday. By Monday evening, it said power had been restored to about 500,000.
- The grid operator said it lost about 34,000 megawatts of supply as freezing temperatures forced natural-gas- and coal-fired power plants offline in quick succession.
- The weather also reduced natural-gas supplies to power plants and caused wind turbines in West Texas to freeze.
- The supply crunch pushed oil and natural-gas prices to their highest levels in months, with West Texas Intermediate crude tracking to settle at about $60 a barrel for the first time since the early days of the coronavirus pandemic.
- New York Gov. Andrew Cuomo’s job approval rating has dropped 10 points since January, a poll released Tuesday showed, amid bipartisan criticism of his administration’s reporting of the number of nursing-home residents who died from Covid-19.
- State officials now say more than 15,000 residents of nursing homes and assisted-living and adult-care facilities were confirmed or presumed to have succumbed to the coronavirus since March of last year—a tally that is around 50% higher than earlier figures released by the state.
- Much of the debate over the death counts has centered on a controversial Health Department directive on March 25 of last year that said nursing homes couldn’t refuse to admit Covid-19-positive patients.
- A Siena College Research Institute poll of 804 New York voters found the Democratic governor’s overall job approval fell to 51-47, down from 56-42 in January.
- When asked if they approved of how Mr. Cuomo had made public information about nursing-home deaths, 39% said they approved compared with 55% who didn’t.
EUROPE & WORLD
Hong Kong Trial of Nine Pro-Democracy Activists Begins – Wall Street Journal, 2/16/2021
- Nine veteran pro-democracy activists appeared together in court Tuesday on charges related to the mass protests that rocked the city in 2019, in a trial that stands out for the number and prominence of the defendants facing prosecution.
- They include 82-year-old pro-democracy campaigner Martin Lee, newspaper publisher Jimmy Lai and seven others who face charges of illegal assembly that carry possible sentences of up to five years in prison.
- At the trial Tuesday, a lead prosecutor detailed the charges of organizing and participating in an illegal assembly on Aug. 18, 2019.
- Though police had granted permission to hold a demonstration at a park that day, prosecutors say the event became an unauthorized march when the large crowd spilled out and organizers led it on a procession across the city.
Factmonster – TODAY in HISTORY
- The tomb of King Tutankhamen, discovered in 1922, was opened. (1922)
- Fidel Castro became the leader of Cuba after having ousted the right-wing dictator Fulgencio Batista. (1959)
- Turkish commandos captured Kurdish rebel leader Abdullah Ocalan in Kenya, sparking seizures of embassies in Europe by Kurds. (1999)
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